Billionaire Leon Cooperman advised investors on Wednesday to stay away from bonds as they are in a bubble.
“My world is cash and stocks. I think bonds are the bubble, not stocks,” Cooperman told CNBC’s “Halftime Report.” He also noted investors should buy stocks they see as “fundamentally cheap” after a recent decline in equities.
Cooperman’s comments come after the benchmark 10-year note yield rose to 3.261 percent last week, its highest level since 2011. The sharp rise in rates spooked investors across the globe, with world equities falling sharply last week.
The Federal Reserve dropped its overnight interest rates to zero in the aftermath of the financial crisis as it tried to jumpstart the U.S. economy. This pushed yields down to historical lows, thus sending bond prices higher and to levels that some investors like Cooperman say reached bubble proportions. Now the Fed is reversing these policies by rising interest rates and trimming its balance sheet. The central bank has already hiked rates three times this year and is forecast to raise them once more before year-end.
Investors were worried that a rise in rates would lead to higher borrowing costs and thus slow down the global economy.
Cooperman, the CEO of Omega Advisors, said the market can handle higher interest rates, however, as there are no signs of a recession looming.
“The economy, if anything, is too strong,” Cooperman said. “The economy is on fire … The conditions that normally lead to a big decline just aren’t present.”
Cooperman’s comments come as U.S. stocks try to recover from a 4.1 percent decline last week amid worries about higher rates, tech valuations and fears of a global economic slowdown.Love Moschino Ankle Boot - Women Love Moschino Ankle Boots online on YOOX United Kingdom - 11451136LNPuma Tsugi Blaze - Sneakers - Men Puma Sneakers online on YOOX United Kingdom - 11262276PEVdp Collection Loafers - Women Vdp Collection Loafers online on YOOX United Kingdom - 11515711UF , DESIGUAL 17wsala8 FASHION FOOTWEAR FOR WOMEN , STROVER 80037 BOTíN PLANO DE MUJER , Pas De Rouge Court - Women Pas De Rouge Courts online on YOOX United Kingdom - 11503984PJ , adidas Predator Tango 18.4 TF World Cup Pack , Twelfth St. by Cynthia Vincent Brown Pebbles SandalsMISS Miu Miu Brown Wooden Sandals Online sales , Nike Neon Pink Women's Flex Running Sneakers , ladies Nike Grey Rejuvenate Sneakers Good designmens/womens ALDO Carerith Heels Year-end special promotions , man/woman Scott Hawaii Alika Sandals Current shape , LEMON JELLY SAPHIRE - Platform sandalsRiver Island High heeled sandals Colour: redmens/womens Anne Klein Jacinda Heels Characteristics , Men/Women Mustang Trainers Colour: hellgrau Price reduction , Casadei Sneakers - Women Casadei Sneakers online on YOOX United Kingdom - 11502660FD , Marni Boots - Men Marni Boots online on YOOX United Kingdom - 11439788CNmen/women Schutz Wendine Sandals a good reputation in the world , Marco Ferretti Boots - Men Marco Ferretti Boots online on YOOX United Kingdom - 11499358MDGuess Sandals - Women Guess Sandals online on YOOX United Kingdom - 11484038IVMarian Sandals - Women Marian Sandals online on YOOX United Kingdom - 11563408AH , Philippe Model Sneakers - Women Philippe Model Sneakers online on YOOX United Kingdom - 11452466NTLaura Biagiotti Sneakers - Women Laura Biagiotti Sneakers online on YOOX United Kingdom - 11566538NI , Vic Matiē Sneakers - Women Vic Matiē Sneakers online on YOOX United Kingdom - 11457576CIFine processing Dr. Martens Shoreditch , WOMEN Prada Desert Suede Sneakers Sneakers Excellent features , Alec Vintage 90's Red Classy Sexy Sandalswomen Jeffrey Campbell Tan Cirque Wedges diversity ,
But Cooperman thinks stocks will bounce back from this decline as they are fairly valued. He also noted the market can handle higher interest rates.
“My central view is the market will be higher than it is today at year-end,” he said. “We’re in a zone of fair value and it’s going to take a recession or a change in the Fed’s posture” to get us out of that.